Tentative pact reached on sale of WMAR-TV

March 21, 1991|By Eric Siegel

Scripps Howard Broadcasting Co. has reached a new agreement to buy WMAR-TV (Channel 2) from Gillett Broadcasting for $125 million, a figure that is substantially less than the $154.7 million agreed to last summer, according to both parties.

The new pact would settle a breach-of-contract lawsuit Gillett filed against Scripps Howard last month after the Cincinnati-based broadcast company terminated the original deal, contending that unspecified closing terms had not been met.

Both parties said yesterday that there were additional issues besides price still to be resolved, though neither would specify what they are or even characterize them.

Gary Holmes, a spokesman for Gillett, said he hoped that the new deal would be finalized "reasonably soon," adding that he expected "a definitive agreement definitely within a month."

Rich Boehne, Scripps Howard's director of corporate communications, declined to set a timetable for completion of the agreement other than to say, "I don't think it will be months."

Mr. Boehne also declined to comment on how the new figure was reached. He referred to a one-paragraph statement Scripps issued Tuesday night, saying the companies had "agreed in principle" to the $125 million price.

Mr. Holmes said the figure was a compromise between the original purchase price and "current market conditions."

Arnie Kleiner, president and general manager of WMAR, declined to comment on the agreement.

Gillett Holdings Inc., parent company of Gillett Broadcasting and the Vail, Colo., ski resort, faces a March 27 deadline to respond to court petitions by several creditors seeking to force the firm into Chapter 11 bankruptcy. The creditors listed claims against Gillett of $21 million.

"All of this figures into" Gillett's desire to reach a new agreement for the sale of WMAR, Mr. Holmes said.

Gillett has been trying to sell WMAR for more than two years. The company said in court papers filed earlier this year that it wanted to use the proceeds from the sale of WMAR to restructure its long-term debt.

In its Feb. 8 announcement that it was terminating the original agreement, signed last August, to buy WMAR for $154.7 million, Scripps Howard said only that "certain conditions" of closing "had not been satisfied."

But Gillett, in its breach-of-contract suit against Scripps Howard, charged that Scripps wanted to avoid closing the deal because of WMAR's declining financial situation.

In the suit, filed in U.S. District Court in Chicago, Gillett cited a letter from Scripps Howard's attorney claiming that "results of operations of the station [in 1990] were materially adverse when compared with the results of operations for 1989 and the station's forecasts, budgets and internal projections for 1990."

Some financial analysts speculated at the time Scripps Howard terminated the original agreement that the parties might in fact negotiate a new agreement at a lower price.

Gillett bought WMAR and a UHF television station in Richmond, Va., in July 1986 for $209 million from the Times Mirror Co., publisher of The Sun. Times Mirror had bought the stations from the A. S. Abell Co., The Sun's former owner, but had to sell it because of federal regulations prohibiting cross-ownership of print and broadcast properties. At the time, WMAR was valued at $190 million.

Gillett first put WMAR up for sale two years later, reportedly asking as much as $275 million. But deals with a series of potential buyers never materialized until last summer's agreement with Scripps Howard.